How to price the work you do, not the goods

Work out what one hour of your shop costs, then price every job from that. Charge for the time, the parts and the machine's share, not for how hard the job looked. Set a minimum for small jobs, say the price before you start, and record the money separately or it will vanish from your profit.

The repair that took forty minutes and earned Rs 200

A man brings in a handset that will not charge. You open it, clean the port, find a broken pin, replace it from a strip you bought months ago, test it, and hand it back. Forty minutes, start to finish, and in the middle of it two customers left because nobody was at the counter.

You charge Rs 200, because that is what is charged for this, because the man in the next street charges Rs 200, and because asking for more felt awkward with him standing there watching you work.

Now count what it actually cost. The pin was Rs 15. Forty minutes of your own time. Two customers who walked out. A soldering iron that will need replacing, a table taken up, and the electricity to run all of it.

Two hundred rupees was not a price. It was a number you inherited from somebody else who also never worked it out.

This is the central problem with selling work rather than goods, and almost every shop that does both has it. The goods on your shelf came with a buying rate printed on the invoice, so you know exactly what they cost you and you would never sell them below it. Your own hour arrives with no invoice at all, so it gets valued at whatever feels reasonable in the moment, which is nearly always too little.

Work has no buying rate, so it gets guessed

Look at how you price a packet of tea. You paid Rs 240, you sell at Rs 280, and if somebody offered you Rs 230 you would refuse without thinking, because the number below which you lose is a hard, known fact.

Now look at how you price stitching a kameez, or fixing a puncture, or printing forty pages. There is no invoice, so there is no floor, so there is nothing to refuse against. When a customer pushes, you have no ground to stand on, and you drop the price, and you feel vaguely that you have lost something without being able to say what.

You have. You gave away the only thing in your shop that cannot be reordered.

There is a second reason work gets underpriced, and it is about how it looks. Goods are visible: the customer can see the packet and knows it came from somewhere and cost something. Your skill is invisible, and worse, the better you are at something the faster you do it, so the price looks less justified the more skilled you are. The man who takes two hours over a job that should take twenty minutes seems to have earned his money. You, who did it in twenty, seem to have pressed a button.

The answer to both problems is the same. Give your hour a rate, and then everything else follows.

What one hour of your shop actually costs

Say the shop is open 260 hours a month

Rent, whether or not anybody comes inRs 18,000

Electricity, phone and small upkeepRs 9,000

The helper who serves while you workRs 22,000

What you must take home to liveRs 60,000

Rs 109,000 spread over 260 open hoursRs 419 an hour

An example, not a real shop. This is the floor, not the price: the number below which an hour of your shop loses money.

Work it out for your own shop once, on a slow afternoon, and never again.

Add up what the shop has to pay every month whether or not anybody walks in: rent, electricity, any helper, the phone, and the small maintenance that always exists. Then add what you need to take home, because your own living is a cost of the business, not a leftover from it. Divide by the hours you are actually open.

That number is your floor. Not your price. The amount below which an hour of your shop loses money, in exactly the way Rs 230 for the tea would.

Most shopkeepers doing this for the first time are surprised twice. Once by how large the hourly number is, and once by how many of their jobs are priced under it. Both surprises are useful, and the second one is the one that changes what you charge on Monday.

If you have already worked out what the shop must sell to cover itself, you have most of this arithmetic done already. This is the same sum, divided by hours instead of by days.

Price the job, calculate by the hour

Customers hate being charged by the hour. It feels open-ended, it makes them watch you, and it turns every job into a negotiation about speed. So do not quote by the hour. Quote a price for the job.

But work that price out by the hour, in your own head, before you say it.

Every quoted job is three numbers added together

1. 1The time, at your own hourly floorForty minutes at Rs 419 an hour is Rs 280, before a single part is counted.
2. 2The parts, at cost plus your normal marginA part is stock, whoever fits it. Charging cost price is a discount you never decided to give.
3. 3The machine's share of this one jobA copier at Rs 60,000 that will do 300,000 copies spends Rs 0.20 of itself on every page.
4. 4Say the total as one number, not threeCustomers hate an hourly rate. Quote the job, and do the arithmetic silently before you speak.

Three parts, every time. The time it will take, at your hourly rate. The parts, at what they cost you plus your normal margin, exactly as if you had sold them over the counter. And a share for the machine, if the job needs one.

That third part is the one everybody forgets. A sewing machine, a soldering station, a photocopier, a welding set: these wear out, and they wear out per job, not per year. A copier that costs Rs 60,000 and does perhaps 300,000 copies before it is finished is spending Rs 0.20 of itself on every page you print. If that is not in the price, you are quietly selling the machine off, one page at a time, and you will be surprised when there is no money for the next one.

Do this for your ten most common jobs, once, and write the answers on a card behind the counter. After that you are not calculating anything, you are reading a rate off a list, which is also what stops you from quoting a different number to the next person who asks.

The minimum charge

Every shop that sells work needs a floor under the smallest job, and most do not have one.

The reason is the setup. Fixing one zip and fixing four zips do not cost you the same, but they do not differ by a factor of four either, because a large part of every job is stopping what you were doing, finding the tool, and starting again. That fixed part has to be paid by the small job as much as by the big one.

So set a minimum. Below this amount, the job costs that amount, whatever it was. Say it plainly and without apology: "The smallest charge here is Rs 150." Nobody argues with a shop that has a stated minimum. Everybody argues with a shop that appears to be deciding each time.

The minimum also fixes the worst customer pattern in service work: the person who brings four tiny jobs on four separate days, each too small to charge for properly, and treats your shop as a place where help is free. With a minimum, he brings all four on one day, which suits both of you.

And when somebody asks you to do something in thirty seconds as a favour, do it and charge nothing, deliberately and visibly. A shopkeeper who has a firm minimum and gives the odd small thing away for nothing is generous. One with no minimum who charges randomly is just unpredictable, and unpredictable is what invites the haggling you get on every discount conversation.

Say the price before you start

Quote first. Always.

✓Before you touch it

• "This one is Rs 450, and it will be ready by six."
• "The smallest charge here is Rs 150, whatever the job."
• "Rs 100 to open it and look, then I will tell you."
• "If it goes past Rs 800 I will call you before doing it."

✕After it is open

• "Leave it here, we will see about the money after."
• "It will be somewhere between two and eight hundred."
• "It needed a part, so it is double what I said." (at handover)
• "For you, whatever you think is right."

The single most expensive habit in service work is starting the job and discussing the money afterwards.

Once the item is open, or the cloth is cut, all the power in the conversation has moved to the customer, and both of you know it. You cannot un-cut cloth. So the price gets negotiated at the exact moment you have the least ability to walk away.

Quote first, always, even when it feels unnecessary with somebody you know. It takes one sentence and it removes every argument that would otherwise happen at handover.

And quote a real number rather than a range. A range is heard as its lower end and remembered as such. If you genuinely cannot know until you open it, say the inspection charge, then a range with a clear reason, then commit to calling before you exceed it. That last part is what keeps a customer from feeling trapped, and it costs you nothing to promise.

If the job grows once opened, stop and say so before continuing. Not at the end. The sentence is short: "It needs a part I did not expect, so it will be Rs 400 instead of Rs 250. Should I carry on?" Nobody has ever been angry at that question. Plenty of people have been angry at the same information delivered at handover.

Work money hides from your profit

Here is the part that catches shops which do both, and it is the reason many of them cannot say whether the service side is worth doing.

Money from goods leaves a trail. Stock went out, cash came in, and the gap between the two is visible. Money from work leaves almost no trail at all. Nothing left the shelf. Often nothing was written down beyond the cash going into the drawer. So at the end of the month the service income is mixed into the takings, the parts it consumed are mixed into the stock, and the whole activity becomes invisible to the one question that matters: is it earning?

Fix it by recording service jobs as their own kind of income, with the parts used noted against them. In Wasoolo that means the job is entered as its own sale with a note, and the parts you used come out of stock at their buy rate, so the profit view can tell you what the work side actually earned rather than burying it in the shelf takings.

Do this for three months and you will know something most shops in your bazaar do not: which of your services makes money, which one you keep out of habit, and which one is quietly funded by the goods. It is the same discipline that produces an honest number for what the shop really earns, applied to the half of the business that has no invoice to remind you.

And once you can see it, the pricing question answers itself. The service that earns well gets more of your hours, a proper sign and a mention to every customer. The one that loses money either gets its rate corrected or gets dropped, and both of those are decisions, which is more than most shops ever get to make about the work they do. Setting the rate itself then becomes the same craft as pricing anything else on the shelf, only with your own hour as the buying rate.

The shop across the street charges half what I have worked out. What do I do?

Do not match a rate you cannot afford. Ask what he leaves out, because it is usually the parts, the machine or his own living. Compete on being quick and reliable instead.

Should I show the customer the breakdown of the price?

Only if asked. A quoted total is cleaner. If somebody questions it, then explaining the parts, the time and the machine is a strong answer rather than a defensive one.

How do I charge for a job I have never done before?

Estimate the hours honestly, add a third for what you have not thought of, and quote that. If it turns out faster, charge less than you quoted and tell him why. That customer comes back.

What about work I do while also serving customers?

It still takes your hours, and it costs you the counter as well. Price it exactly the same, and if a job cannot be interrupted, say when you will do it rather than squeezing it in badly.

My customers expect small repairs for free because they buy from me.

Keep a small number of free things and name them out loud, so generosity is a choice you made rather than a habit you got trapped in. Everything else goes on the rate card.

Should the parts carry the same margin as the shelf?

Yes. A part is stock, whoever fits it. Charging cost price for parts is a discount you never decided to give.